The final Peru and Panama texts incorporate the terms of the earlier “concept paper” negotiation between the House Ways and Means Committee and the U.S. Trade Representative, for better and worse, with few changes. Our statement on the conceptual deal is available here.

It remains the case that the Peru/Panama trade deals will leave patients worse off than they would be with no agreement. The agreements enhance monopoly protections for medicines beyond those required under the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property (TRIPS), and will worsen public health.

These revised trade agreements are less bad than the original versions, in some notable ways. If the deals are adopted — and we hope they are not — it will be important that Peru and Panama aggressively incorporate in their implementing legislation (and subsequent revisions) the flexibilities that have been added thanks to the negotiating efforts of the Ways and Means Committee.
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More generally, the revised trade deals now set a ceiling for the TRIPS-plus measures that can be imposed on developing countries. No country negotiating trade or investment agreements or frameworks, or responding to unilateral demands from the United States, should ever accept more than has been included in these deals, which have been accepted by the pro-Pharma Bush administration.

However, as the Ways and Means Committee has insisted, the Peru/Panama trade deal terms are not a template for future trade agreements. This is what the committee was able to negotiate for an already finalized text. Any future agreements should be expected to be more public health-friendly.

The days of the U.S. government trade bureaucracy reflexively carrying water for Big Pharma are coming to an end. The revisions extracted by the Ways and Means Committee are one sign. The strong opposition evidenced by Members of Congress to USTR pressure on Thailand for its lawful issuance of compulsory licenses is another.

Regarding specific revised terms:

1. The revised text preserves the obligation to provide 5 years of data exclusivity (16.10.2), which is the top TRIPS-plus priority of Big Pharma. Data exclusivity provides monopoly protections separate from those provided by patents, or forces generic companies to undertake unethical, redundant, time-consuming and relatively expensive clinical tests. The monopoly protections afforded by data exclusivity can delay generic competition in cases where a pharmaceutical product is not patent protected, or where a compulsory license has been granted on a patent. Because the compulsory license on a patent only covers the patent right, a generic firm may be barred from entry by the data exclusivity rules, which effectively prevent it from gaining marketing approval.

Informally, USTR has agreed in the past that countries could override data exclusivity protections at least in cases where a compulsory license was issued. We had hoped that the final text would clearly state that countries can override data protections with compulsory licensing-like mechanisms, in cases where they have issued a compulsory license on pharmaceutical patents, but also in other cases. The final text does not provide this assurance, though it does include a “notwithstanding” clause (16.10.2(e)) that permits countries to protect public health in accordance with the Doha Declaration. If the agreement is adopted, we will work hard to advance an interpretation that says this must mean countries have the right to regularly override data protections with compulsory licensing-like mechanisms, but we fear the general and vague language of this provision will not give countries the confidence to do so.

It is true that, where partner countries rely on registration approvals in the United States in making their own registration decisions, the data exclusivity language offers the opportunity to limit the term of protection to just five years from the date of registration in the United States. This is an improvement from the even more onerous measures in CAFTA and other trade deals. There are some other technical limitations on data exclusivity that will limit its scope.

There is an interesting feature in the data exclusivity language that was not anticipated by the concept paper: Under 16.10.2(b), exclusivity is mandated for a reasonable period. Then: “For this purpose, a reasonable period shall normally mean five years from the data on which the Party granted approval to the person that produced the data for approval to market its product, taking account of the nature of the data an the person’s efforts and expenditures in producing them.”

This suggests that:

a. Five years is the norm, but it can be deviated from.

b. A country may require disclosure of at least some information about cost of producing the data as a condition of its routine grant of the 5 years of exclusivity. This is important, because Big Pharma routinely wildly overstates the cost of clinical trials and drug development,without providing any substantive evidence for its claims.

c. The reasonable period of exclusivity may be shortened on a case-by-case basis, at least in light of actual expenditures for R&D (if not, for this provision, on pure public health grounds). It is conceivable, at least in some cases, that these provisions could be used to justify substituting a cost-sharing approach for exclusivity. (Under a cost-sharing approach, a generic firm must pay a fair share of the costs of clinical trials, but is able to rely on those trials immediately.)

2. The revised text does eliminate mandatory pharmaceutical patent extensions for delays in the grant of a patent or regulatory approval. 16.9.6(c). Mandatory extensions pose enormous access to medicines problems. Because of the low patent review capacity in many developing countries, there is a significant and growing backlog of patent applications. Mandatory delays therefore threaten very prolonged periods of patent monopolies.

3. The revised text does eliminate the requirement for “linkage” — a prohibition on the drug regulatory agencies granting regulatory approval if a patent is claimed. The revised text language (16.11.3 and 16.11.4) is imperfect, but does eliminate the requirement. One unfortunate element is the requirement that alternative expedited patent enforcement mechanisms be provided before a product is placed on the market. Separately, from an implementation perspective, it is vital that countries include in the expedited process an opportunity for generic firms to challenge the validity of the underlying patents the brand-name firm is seeking to enforce. It is also the case that the provisions in 16.11.4 could be adopted by countries that have previously entered into TRIPS-plus agreements with the United States.

Linkage provisions turn drug regulatory agencies into patent enforcement agencies, even though such a duty is outside of their expertise and purpose. In the United States, which includes significant safeguards (the elements of 16.11.4, plus a large market and robust generic industry), linkage has nevertheless been subjected to considerable abuse, as recognized repeatedly by the Federal Trade Commission.

4. The revised text does incorporate the side letter on public healthinto the actual text. (16.13) Incorporation of the side letter is an improvement, but the general terms cannot override the more specific problematic provisions; and it is hard to put much stock in such terms, since USTR has repeatedly demonstrated its willingness to disregard such obligations in the past.

There are some positive changes to previous side letters.

The word “necessary” has been eliminated. The current text 16.13.1 reads that the chapter should not prevent countries “from taking measures to protect public health by promoting access to medicines for all.” The previous text said countries should not be prevented “from taking measures “necessary” to protect public health by promoting access to medicines for all .” Since “necessary” is a very restrictive term in international trade law, removing the term is an improvement.

Also, additional language from the Doha Declaration has been incorporated: “Accordingly, while reiterating their commitment to this Chapter, the Parties affirm that this Chapter can and should be interpreted and implemented in a manner supportive of each Party’s right to protect public health and, in particular, to promote access to medicines for all.” This should help give this provision some greater interpretive impact.